The Central Bank of Kenya (CBK) is seeking KSh 70 billion from two reopened infrastructure bonds to finance projects in the current fiscal year.
- The reopened 14 year paper, which was first issued in 2022, has a remaining time to maturity of 11.8 years and a 13.9380% coupon rate, while the 17 year paper with a 14.3990% coupon rate has 15.1 years to maturity.
- Under CBK’s amortised redemption structure, the apex bank will pay back the bonds to investors in parts over the life of the bond, instead of all at once.
- 50% of the outstanding amount will be remitted on 4th November 2030, and the other half six years later, for the 14 year paper.
The 17 year paper will have 50% of the unencumbered outstanding principal amount paid on 28th February 2033 and final redemption on 20th February 2040.
The two bonds are expected to attract investors owing to their tax free nature. This comes after s proposal by the National Treasury to introduce a 5% withholding tax on interest from infrastructure bonds was rejected in parliament.
“The bonds will be tax free as is the case for Infrastructure Bonds as provided for under the income tax act,” CBK noted in the prospectus.
In the debut 2024 infrastructure bond, the government raised KSh 288.6 billion against the KSh 70 billion on offer – a 412.4% oversubscription.
“There’s been significant foreign interest in the infrastructure bond, and we anticipate this will also bring in foreign exchange from these purchases,” said CBK Governor Dr. Kamau Thugge, shortly after the bond’s February 2024 issuance.
According to the prospectus by CBK, bidding for the two papers runs until 12th February 2025.
